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A theory of search with deadlines and uncertain recall

Author Info

  • S. Nuray Akin

    (Department of Economics, University of Miami)

  • Brennan Platt

    (Department of Economics, Brigham Young University)

Abstract

We analyze an equilibrium search model where buyers seek to purchase a good before a deadline and face uncertainty regarding the availability of past price quotes in the future. Sellers cannot observe a potential buyer's remaining time until deadline nor his quote history, and hence post prices that weigh the probability of sale versus the profit once sold. The model's equilibrium can take one of three forms. In a late equilibrium, buyers initially forgo purchases, preferring to wait until the deadline. In an early equilibrium, any equilibrium offer is accepted as soon as it is received. In a full equilibrium, higher prices are turned down until near the deadline, while lower prices are immediately accepted. Equilibrium price and sales dynamics are determined by the time remaining until the deadline and the quote history of the consumer.

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File URL: http://bus.miami.edu/_assets/files/WP2012-03.pdf
File Function: First version, 2012
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Paper provided by University of Miami, Department of Economics in its series Working Papers with number 2012-3.

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Length: 40 pages
Date of creation: 12 Jan 2012
Date of revision:
Publication status: Forthcoming: Under Review
Handle: RePEc:mia:wpaper:2012-3
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Phone: (305) 284-5540
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Web page: http://www.bus.miami.edu/faculty-and-research/academic-departments/economics/index.html

More information through EDIRC

Keywords: Equilibrium Search; Deadlines; Uncertain Recall; Price Posting; Reservation Prices;

Other versions of this item:

Find related papers by JEL classification:
  • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
  • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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References listed on IDEAS
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  1. Ching-to Albert Ma & Michael Manove, 1991. "Bargaining with Deadlines and Imperfect Player Control," Papers 0007, Boston University - Industry Studies Programme.
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  21. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-73, May.
  22. Andrew F. Daughety & Jennifer F. Reinganum, 1992. "Search Equilibrium with Endogenous Recall," RAND Journal of Economics, The RAND Corporation, vol. 23(2), pages 184-202, Summer.
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  25. Landsberger, Michael & Peled, Dan, 1977. "Duration of offers, price structure, and the gain from search," Journal of Economic Theory, Elsevier, vol. 16(1), pages 17-37, October.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. A theory of search with deadlines and uncertain recall
    by Christian Zimmermann in NEP-DGE blog on 2012-07-15 16:31:25

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